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#CubaNow Briefing: The Pro-Embargo Lobby’s Smoke and Mirrors Show

#CubaNow Briefing

Jul 15, 2016

Friends,

As Congress prepares for its seven-week recess, Cuba is girding itself for what may be one of its most difficult summers in years. A combination of factors—including an energy grid strained by an increase in small businesses and travelers and a reported drop in oil exports from Venezuela—have many Cubans anxious about another “special period,” filled with frequent electrical blackouts and supply shortages. But if there is any small comfort to be found over the next two months, it’s that lawmakers’ efforts to ensure the embargo persists are finding it increasingly difficult to do so.

As we noted in our last briefing, sponsors of amendments to an appropriations bill to repeal the travel ban and allow financing of agricultural exports to Cuba withdrew them last week. After initially being caught off-guard by the high level of support for the amendments, South Florida’s delegation, including Rep. Mario Diaz-Balart and Rep. Ileana Ros-Lehtinen, furiously whipped against them with the support of House leadership. As a result, even with what would have likely been a successful vote on the exports amendment, sponsor Rep. Rick Crawford of Texas announced he would instead work with his pro-embargo colleagues on a “long term solution” toward exports to Cuba. The pro-embargo wing of Congress then rewarded this camaraderie by continuing to press for additional Cuba sanctions and restrictions, including more red tape on American travelers headed to the Island.

And their spin on this last-minute scramble to avoid an embarrassing defeat? “There is bipartisan support in the House to strengthen sanctions against the regime,” said Rep. Mario Diaz-Balart.

The carefully constructed reality that Rep. Diaz-Balart has surrounded himself with would make The Truman Show proud. The fact is that without unintended delays in the Congressional calendar, we could very easily have seen a different result in the chamber of Congress that has historically been the embargo’s best friend. Left unsaid by Rep. Diaz-Balart is how this “bipartisan support” for sanctions has only continued to shrink as more members of Congress realize the embargo has failed. He left out any mention of how the same House GOP leadership that had to fiercely lobby their own members included a Speaker who once vehemently supported expanding travel to Cuba as a “bedrock [American] principle.” He ignored the very real support for trade and travel legislation that has reached unprecedented levels in the Republican-controlled Senate, which will likely drop his amendments in conference. And as we’ve grown used to seeing, he ignored the overwhelming support from Cubans and Americans for ending the embargo.

The embargo’s supporters on the Hill have become increasingly aware these last few weeks that the fort won’t hold for long. They may announce deals or agreements to stall for time or kick the can down the road, but the writing is on the wall. There’s only so many times you can claim to help the Cuban people by trying to stem the flow of American customers or blocking businesses in the U.S. from selling them chicken and rice on credit.

Thank you for your support,

David Gomez

Political Director, #CubaNow


Cuba Braces For Difficult Times Ahead

Cuban President Raul Castro Warns Of Hard Times Due To Economic Crunch Across Latin America. “President Raul Castro told Cubans on Friday to brace for tough times because the Communist-run country must cut spending and energy supply as it deals with a cash crunch and reduced oil imports from ally Venezuela. Cuban economic growth slowed to 1 percent in the first half of this year from 4.7 percent in the same period of 2015, Castro told the mid-year session of the National Assembly. This was half of what the government had forecast. The economic outlook throughout Latin America has weakened due to lower commodity prices.” [Reuters, “Castro admits Cubans face hard times as economy slows sharply,” 7/9/16]

Cubans Fear Return Of Energy Shortages. “Now, grim economic forecasts; the crisis in its patron, Venezuela; and government warnings to save energy have stoked fears among Cubans of a return to the days when they used oil lamps to light their living rooms and walked or bicycled miles to work because there was no gasoline. Addressing members of Parliament last week, Cuba’s economy minister, Marino Murillo, said the country would have to cut fuel consumption by nearly a third during the second half of the year and reduce state investments and imports. His comments, to a closed session, were published on Saturday by the state news media.” [New York Times, “Amid Grim Economic Forecasts, Cuban Fear a Return to Darker Times,” 7/12/16]

Consultant Mark Entwistle: Cuba Still Has Options To Avoid A Repeat Of The “Special Period” Following The Soviet Union’s Collapse. “Mark Entwistle, a business consultant who was Canada’s ambassador to Cuba during the special period, said that despite its dependency on Venezuelan fuel, the island’s economy is now more sophisticated and diversified than it was before the Soviet collapse. Besides, he said, Cuba has ‘this phenomenal social and political capacity to absorb critical changes.’ Still, some are perturbed at the prospect of power cuts. None of the Havana residents interviewed over the weekend had experienced power failures in their neighborhoods… The United States may offer help in order to prevent instability or a mass exodus of desperate Cubans. The Cuban government might speed reforms and open the door wider to foreign investment, Mr. Entwistle said. ‘To extrapolate some dire political consequence is unwise,’ said Mr. Entwistle, adding, ‘There are so many levers that they have to push and pull.’” [New York Times, “Amid Grim Economic Forecasts, Cuban Fear a Return to Darker Times,” 7/12/16]

Cuban Government Says Economy Minister Stepping Down To Focus On Economic Reforms. “Communist-ruled Cuba said on Wednesday it had removed Marino Murillo from his post as economy minister so he could focus more on his role spearheading the country's market-style reforms. Murillo will be replaced by another veteran politician, Ricardo Cabrisas Ruiz, who has been responsible for the country's international economic relations, in particular its recent debt restructuring. Both are vice presidents. The cabinet shuffle comes days after President Raul Castro and Murillo told Cubans to brace for tougher times due to a cash crunch and lower oil assistance from key ally Venezuela.” [Reuters, “Cuba says shuffling cabinet to prioritize reform agenda,” 7/14/16]


Despite Agreement On Reforming Cuba Policy, Congressional Hardliners Still At It

Financial Services Appropriations Bill Contains Amendments Strengthening Cuba Sanctions. “The budget bill for 2017 financial services and general government spending has been approved in the House of Representatives with several clauses that strengthen sanctions on Cuba. The clauses limit ‘people to people’ exchange trips, prohibit the use of funds for trafficking in confiscated property, restrict financial transactions with entities tied to the Cuban military and forbid the granting of trademark rights and intellectual property with businesses or properties confiscated by the Cuban government. The strengthened restrictions are included in the text of the budget bill that was approved last week after two amendments to remove restrictions on agricultural exports and travel to Cuba were withdrawn by their sponsors — Representatives Rick Crawford and Mark Sanford, respectively.” [InCubaToday, “House approves bill with clauses that strengthen Cuba sanctions,” 7/12/16]

Happening in Cuba

Cuba Opens First Bulk Goods Store. “Cuba has quietly opened a first-of-its-kind store specializing in bulk goods in Havana: Zona +, a high-ceiling space with racks stacked with large tins of tomato sauce, toilet paper and cooking oil by the gallon. It's not quite Costco, and it falls short of satisfying longstanding calls for a wholesale market to support the growing class of small-restaurant and-cafeteria owners who have set up shop under President Raul Castro's economic reforms begun six years ago. But it could help relieve the pressure that those entrepreneurs have been putting on other retail stores by snapping up huge quantities of goods, leaving regular customers in the lurch.” [ABC News, “Cuba Opens 1st Bulk Goods Store, but Wholesale Still Elusive,” 7/11/16]

Irish Company Surveys How Cubans Use Internet And Smartphones. “More than half of the Cubans who use the island’s Nauta internet service provided by the national telecommunications monopoly ETECSA, have to travel up to three miles to get to a wifi spot. That data was obtained by Ding, a company based in Ireland used daily by thousands of people across the globe to send mobile recharge and Nauta credit to phones in Cuba. The company recently carried out a survey on 100 people in Havana and asked them about how they use the internet in Cuba since the introduction of the wifi hotspots last year.” [InCubaToday, “How do Cubans use the internet and smartphones on the island?” 7/12/16]

Life For Cuba’s LGBT Community A Break From The Early Days Of The Cuban Revolution. “The existence of an LGBT-friendly nightclub in rural Cuba shows how far the country has come since the early days of Fidel Castro’s revolution. In the 1960s, guerrilla fighters sent gay people to labor camps for ‘re-education,’ and HIV-positive gays were quarantined. Until 1979, homosexual acts were still classified as a crime. But things have changed dramatically since then. Mariela Castro, the daughter of Cuban President Raúl Castro, began publicly discussing HIV-prevention and openly pointed the finger at Cuba’s ‘patriarchal and homophobic culture.’ She led a battle to include gender reassignment surgery in the nation’s free health system, which became law in 2008.” [USA Today, “Cuba’s gay community comes out of the closet,” 7/10/16]

Opening Of U.S.-Cuba Relations Leading To More Interest In Cuban Consumers. “When relations between Cuba and the United States were in the deep freeze, few American companies viewed the island as a potential consumer market. With rock-bottom salaries and the embargo firmly in place, there was little to pique their interest. But now with the Obama administration’s opening toward Cuba, international consulting companies have begun to take the pulse of Cuban consumers. The latest consumer survey comes from Rose Marketing, which was founded in Boston and was the first independent advertising and public relations firm to enter the then Soviet Union in 1989. It is now headquartered in Moscow and has consulted for many multinational firms. Last year Rose become one of the first marketing agencies offering its services in Cuba.” [Miami Herald, “Cubans don’t make much, but it’s more than state salaries indicate,” 7/13/16]

Cubans Earning “Considerably More” In Self-Employed Sector. “Many Cubans have jobs on the side, and in recent years about a half million have joined the ranks of Cuba’s cuentapropistas, or self-employed. Although there are still many government restrictions on self-employed workers, the earnings potential for some is considerably more than state salaries. About 50,000 employees of Cuba’s joint ventures with foreign companies also have higher earnings potential as do those employed in the tourism sector who get tips.” [Miami Herald, “Cubans don’t make much, but it’s more than state salaries indicate,” 7/13/16]

Mitsubishi Scouting For Business In Cuba. “Japanese trading house Mitsubishi Corp is scouting for business opportunities in Cuba including infrastructure projects at its Mariel special development zone, a top executive said on Friday. Companies from Cuba's long-term trading partners such as Japan have stepped up interest in the Communist-ruled island since its detente with Washington, seeking to win investment projects before their U.S. competitors turn up. ‘We are trying to find new business opportunities to establish some infrastructure projects ... as well as new trading opportunities,’ Mitsuyuki Takada, Senior Vice President of Mitsubishi Corp Global Strategy, told Reuters on the sidelines of the launch of the firm's new Havana office.” [Reuters, “Mitsubishi Corp says scouting for Cuba infrastructure projects,” 7/8/16]

Billions In U.S. Remittances To Cuba Supporting The Island’s Economy. “Despite the U.S. trade embargo on the island of Cuba, many Cuban-American families are supporting the economic recovery and growth of their relatives through remittances. The total value of Cuban remittances in both cash and goods in 2015 was estimated to be over $3.3 billion by The Havana Consulting Group, a business consulting firm specializing in Cuban marketplaces. This figure places remittances as the largest source of cash in the Cuban economy. The U.S. Department of State estimates the value of remittances at a significantly lower $2 billion annually. The exact dollar amount of remittances can be difficult to track, says Karell Acosta Gonzalez, a PhD researcher at University of Havana’s Center for Hemispheric and U.S. relations. ‘It’s difficult to talk about those figures because many of those remittances get to Cuba with people,’ says Acosta. ‘They are carried in with bags.’ [InCubaToday, “Remittances support budding Cuban economy,” 7/11/16]


Progress And Challenges In U.S.-Cuba Relations

U.S. And Cuban Officials Hold Third Round Of Regulatory Talks. Cuban and U.S. officials wrapped up two days of regulatory talks behind closed doors in Havana on Wednesday, the third round of such negotiations between the one-time Cold War foes amid a thaw in diplomatic ties. A Cuban Foreign Ministry statement said the discussions centered on modifications to the U.S. economic embargo made by the Obama administration and limitations that remain, as well as Cuban regulations governing commercial and financial relations. No new agreements were announced. [AP, “Cuba, US hold 3rd round of regulatory talks amid thaw,” 7/13/16]

TSA: Cuba Must Meet Security Requirements For Flights To The U.S., As Would Any Other Country. “The head of the Transportation Security Administration said Wednesday that scheduled airline flights from Cuba wouldn’t be allowed in the U.S. until security is as tight as any other foreign airport sending flights to this country. The Transportation Department approved flights from 10 Cuban airports, with the first scheduled to arrive in September. But some lawmakers have questioned whether Cuba’s airports will meet U.S. security standards or potentially become a pipeline for bombs and terrorists. ‘Before we allow a flight to come here directly from Cuba, we will ensure that they do in fact meet all the requirements we put in place at last points of departure,’ TSA Administrator Peter Neffenger told reporters after a speech at the Woodrow Wilson International Center for Scholars.” [USA Today, “TSA says Cuba must meet security standards for flights,” 7/13/16]

Cuban Policies Making Coffee Exports Difficult For The Island’s Farmers. “On April 22, the U.S. State Department added coffee to a list of products entrepreneurs within the Republic of Cuba are permitted to export to the United States. According to the U.S. State Department, those who can prove that they operate a business outside of the state sector, as well as meet a variety of other requirements pertaining to the business and its product, can sell their goods to American companies. However, Cuban policies on the exportation of goods are making it difficult for Cuban coffee farmers to utilize this change in policy. ‘There is no way,’ said Karell Acosta Gonzalez, professor for the Center for Hemispheric and U.S. Studies at the University of Havana. ‘All exports must go through state-owned companies. It’s in the Constitution.’” [InCubaToday, “Cuba making it difficult for farmers to export coffee to the U.S.,” 7/7/16]

Group Of Cuban Government Officials Criticized U.S. Policy Changes Allowing Cuban Coffee Imports As “The Intentions Of Imperialist Policy.” “Since the State Department announced this change in April, the National Bureau of Small Farmers Association (ANAP), a group of government officials who represent Cuba’s farmers, published a statement about the updated policy last month. ‘Next to the workers and our entire people, we are facing up to the intentions of imperialist policy, to bring about division and disintegration in Cuban society, which is what they would seek with the recently announced measure,’ ANAP wrote in their statement.” [InCubaToday, “Cuba making it difficult for farmers to export coffee to the U.S.,” 7/7/16]